Author: therawinformant

If you’re looking for strong returns over the next decade, but small caps are too risky for your tastes, then you might want to take a look at the mid cap space.

I think this is a great side of the market to look for investment ideas. This is because mid caps traditionally carry less risk than small caps but offer stronger potential returns than large caps.

With that in mind, I have picked out three top mid cap ASX shares which I think would be top options:

Collins Foods Ltd (ASX: CKF)

The first ASX mid cap share to consider buying is Collins Foods. It is one of the ANZ region’s largest KFC restaurant operators and also has a growing presence in Europe. It is these operations that I’m most bullish on over long term. Due to the under penetration of the KFC brand in Europe, I believe there is a significant expansion opportunity over the next decade. In addition to this, the company’s rollout of the Taco Bell brand across Australia appears to be going well and could be supportive of growth in the coming years.

EML Payments Ltd (ASX: EML)

Another mid cap share to look at is EML Payments. It is a payments company with a focus on pre-paid cards and digital gift cards. It provides its services to a wide range of businesses such as shopping centres, bookmakers, and salary packaging companies. Given its exposure to shopping centres, its performance is likely to be impacted greatly because of the pandemic. However, I believe this is understood and built into its share price now. In light of this, I would suggest investors focus on its very positive long term outlook. Which was boosted recently with the acquisition of UK-based Prepaid Financial Services. This has diversified its offering and gives EML access to the emerging field of banking as a service.

Jumbo Interactive (ASX: JIN)

A final mid cap share to consider buying is Jumbo Interactive. It is an online lottery ticket seller and the operator of the Oz Lotteries website. Jumbo also has a growing Software as a Service (SaaS) business which looks set to be the key driver of growth in the future. It is the international expansion of this business that is expected to play a key role in the company achieving its target of $1 billion in ticket sales through its platform by FY 2022. This will be triple what it achieved in FY 2019. Considering how the majority of lotteries globally are still not online, I believe the Powered by Jumbo SaaS business has a very lucrative global opportunity.

More reading

• 3 stellar mid cap ASX shares to buy
• Here’s how to start investing with $5k
• 2 top ASX shares to buy for reporting season
• Why these ASX mid cap shares could smash the market over the next 5 years
• Is now the time to buy the Jumbo Interactive share price?

James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Emerchants Limited and Jumbo Interactive Limited. The Motley Fool Australia has recommended Collins Foods Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Mining technology provider Imdex Limited‘s (ASX: IMD) share price gained an impressive 19.8% in July. That far outpaced the 0.9% gain from the All Ordinaries (INDEXASX: XAO).

After more than four years of strong performance, Imdex’s share price got hammered during COVID-19 panic selling in February and March. After hitting a record high share price of $1.71 on 26 February, Imdex’s share price cratered 53% by March 25.

From there, the company’s share price ran higher — with plenty of ups and downs along the way — to gain 66% by 31 July.

Year to date, the mining tech’s share price is down 6.8%. At the current price of $1.37 per share, Imdex has a market cap of $531 million.

What does Imdex Limited do?

Imdex develops cloud-connected devices and drilling optimisation products to improve the process of identifying and extracting mineral resources for mining companies across the world. Its technologies include drilling fluid products, data solutions and geo-analytics services to improve exploration results by helping companies obtain accurate subsurface data and receive critical information in real-time.

Imdex operates in the Asia Pacific, Europe, Africa, the Middle East and the Americas.

Why did Imdex’s share price leap 20% in July?

There was no single cause to drive Imdex’s share price up 20% in July.

The Imdex share price likely benefitted from the rapid resurgence of most of the mining companies it supplies following the shock downturn in February and March.

On 7 July, Imdex also released a promising announcement to the ASX, stating it had acquired AusSpec International Limited for $8.5 million. $3 million of that was in cash with the remaining $5.5 million in Imdex shares. AusSpec is a leading provider of spectral mineralogy through its Artificial Intelligence (AI) Spectral InfraRed Interpretation System. Imdex reported its acquisition was immediately cashflow positive and would provide a recurring revenue stream.

On 20 July, Imdex also reported that, “interest in its cloud-connected technologies has spiked during the COVID-19 pandemic, the positive effect of which will flow through for the next 10 years”.

Chief Executive, Paul House, noted that the impacts of the coronavirus on the way people in the mining industry were working had moved up the adoption of some of Imdex’s products and services by as much as 12 months.

More reading

• 3 mid cap ASX shares that could generate strong long term returns
• Why the Pilbara Minerals share price surged 40% in July
• The latest ASX stocks leading brokers are urging you to buy today
• ASX 200 rises 0.5%, Mesoblast plunges
• 5 quality ASX shares to buy in August

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Australian lithium producer Pilbara Minerals Ltd‘s (ASX: PLS) share price surged 40.0% in July. That compares to a 0.9% gain from the broader All Ordinaries (INDEXASX: XAO).

Like almost every other share on the ASX, Pilbara’s shares plummeted during the selloff following the rapid spread of COVID-19. From 21 February through 23 March, Pilbara’s share price plunged 55%.

Following its 23 March low, the Pilbara Minerals share price recovered rapidly and strongly, gaining 150% by the final trading day of July.

Year to date, the company’s shares are up 24% to 38 cents per share. That gives it a market capitalisation of $856.5 million. Over the last year, Pilbara has traded at a 52-week low of 14 cents, and a 52-week high of 52 cents per share.

What does Pilbara Minerals do?

Headquarter in Perth, Western Australia, Pilbara is a lithium-tantalum producer. It owns 100% of the Pilgangoora Project in Western Australia. The region is believed to contain some of the largest deposits of hard-rock lithium-tantalum in the world.

Currently in production, Pilbara Minerals is commencing the expansion of its Pilgangoora Project. This Stage 2 expansion will see a substantial increase in its processing capacity.

With lithium helping power electric vehicles and the wider transition away from carbon-based fuels, Pilbara Minerals aims to become one of the biggest producers in the world.

Why did the Pilbara Minerals share price surge 40% in July?

The Pilbara Minerals share price gained steadily throughout July without any major announcement that would have clearly drawn in new investors. Atop that, the lithium price didn’t make any major moves to warrant the 40% increase either.

It’s likely that many investors are speculating on the longer-term transition away from fossil fuels and towards more environmentally friendly energy sources like rechargeable batteries. And lithium is a key element in batteries that will drive tomorrow’s fleet of electric vehicles. It will also help fuel the growing market for home battery energy storage from solar and wind power.

Pilbara Minerals’ share price did gain 8% in a single day’s trading on 30 July, following its ASX media announcement that the company had secured a new US$110 million (AU$153 million) low-cost debt facility.

The new financing is being provided by international bank BNP Paribas and Australia’s Clean Energy Finance Corporation (CEFC). Both companies are long-term Pilbara supporters.

More reading

• Are ASX lithium shares the next big thing?
• These were last week’s best performing ASX shares
• Here’s how to start investing with $5k
• Why the Pilbara Minerals share price surged 8% today
• Up 38% in July! Is the Orocobre share price a buy?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Pilbara Minerals share price surged 40% in July appeared first on Motley Fool Australia.

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There’s an unmistakable air of optimism around this reporting season. If this is putting you in a buying sort of mood, there are the latest ASX stock “buy” ideas from leading brokers.

It’s also safer to buy stocks when the tide is rising, and this certainly was the case today with the S&P/ASX 200 Index (Index:^AXJO) gaining 0.5%.

Investors seem to have forgotten their COVID-19 fears as the early profit result releases are better than what many have feared. Let’s hope this continues.

While this isn’t typically the ideal time to be buying stocks (not so early into the reporting season), brokers think now is the right time to be buying these ASX stocks.

Bargain properties

The GPT Group (ASX: GPT) share price may appeal to value buyers with a stomach for volatility. JPMorgan reiterated its “overweight” recommendation on the retail and office property group even after its interim results missed its mark.

But the broker isn’t concerned even though it warned that GPT’s properties is likely to suffer more write downs due to the COVID-19 fallout.

The group reported a net tangible asset (NTA) of $5.52 a share, which is 5% lower than in December. This is likely to fall again with JPMorgan forecasting a 30% drop in the value of GPT’s retail properties and a 20% decline in its office portfolio.

Even then, GPT’s NTA should come in at around $4.50 a share, which is well ahead of GPT’s last closing price of $4.03.

JPMorgan’s price target on the group is $4.70 a share.

On the right track

Meanwhile Morgans is sticking to its “add” recommendation on the Aurizon Holdings Ltd (ASX: AZJ) share price.

The rail operator’s full year results came in ahead of expectations, although its FY21 outlook was softer than what the broker would have liked.

Higher dividends

But Aurizon’s defensively positioned business is ideal in this volatile environment. What’s more, Morgans believes it can lift its dividend from 27 cents a share to 31 cents in FY22.

Even on the current dividend, the stock’s yielding close to 6% before its 70% franking credit.

Aurizon’s strong balance sheet is another thing to like about the stock with management using its excess firepower to fund a $300 million on-market share buyback.

Morgan’s price target on the stock is $15.14 a share.

New highs likely

Finally, don’t let the rocketing James Hardie Industries plc (ASX: JHX) share price put you off even as it hits a new record high of $32.22 on Tuesday.

Goldman Sachs believes there’s more upside following the building materials group’s latest quarterly earnings update.

The broker was particularly taken by James Hardie’s outlook for its North American business, which appears to be taking market share.

The outperformance of this division is behind management’s upbeat FY21 net profit guidance of US$330 million to US$390 million. This compares with consensus estimates at US$344 million.

The broker’s 12-month price target on the stock is $34.38 a share.

More reading

• ASX 200 rises 0.5%, Mesoblast plunges
• Why the Coles share price just hit a new record high
• Here’s why the OZ Minerals share price rocketed 24% in July
• These record breaking ASX stocks just got downgraded by top brokers
• Has the ASX 200 finally taken off?

Motley Fool contributor Brendon Lau owns shares of James Hardie Industries plc. The Motley Fool Australia has recommended Aurizon Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post The latest ASX stocks leading brokers are urging you to buy today appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) rose by almost 0.5% today with the ASX continuing to climb.

There was one major plunge on the ASX:

Mesoblast Limited (ASX: MSB) share price crashes lower by 30.6%

Mesoblast released an announcement today on the scheduled meeting of the Oncologic Drugs Advisory Committee (ODAC) of the US FDA for the approval of Ryoncil in the treatment of steroid-refractory acute graft versus host disease in children.

The meeting is scheduled to take place on 13 August 2020. The ODAC will vote on whether the available data support the efficacy of the treatment of patients.

However, the US healthcare regulator released a document which seemed to cast doubt on whether Mesoblast will get approval, which is why the ASX 200 share dropped so hard.

According to the briefing, the FDA has concerns about the clinical performance of the drug product (DP).

It stated: “FDA’s position is that the product attributes the Applicant has identified as related to potency and activity, however, do not have a demonstrated relationship to the clinical performance of specific DP lots, and that the product’s proposed immunomodulatory mechanism of action has not been demonstrated in vivo in study subjects receiving remestemcel-L.”

“Without a demonstrated relationship with clinical effectiveness and/or in vivo potency/activity, controlling these CQAs [critical quality attributes] may not be sufficient to ensure the manufacturing process consistently produces remestemcel-L lots of acceptable quality.”

Challenger Ltd (ASX: CGF) share price drops 7.6%

Challenger announced a troubled FY20 result today which showed a statutory loss after tax of $416 million after significant investment declines in its ‘life’ business due to the pandemic market sell-off.

Normalised net profit before tax was down 8% to $507 million and normalised net profit after tax was down 13% to $344 million.

Challenger’s assets under management (AUM) went up 4% to $85.2 billion. With funds management net flows of $2.5 billion. Life sales went up 13% during the year.

Challenger CEO and managing director Richard Howes said: “Our domestic annuities sales continue to be impacted by structural changes to the wealth management market, and this year have been additionally affected by new age pension means test rules and the COVID-19 disruption. We are quickly evolving our business in response to the changes, and we are seeing positive signs that we are well positioned to rebuild momentum in the new market environment. One example is the growth we are now achieving in lifetime annuity sales via independent financial advisers.”

The board of the ASX 200 share decided not to pay a final FY20 dividend. There is still a lot of uncertainty. The company wants to ensure it remains robust during this period. 

In FY21 the company is expecting normalised net profit before tax in the range of $390 million to $440 million.

Sydney Airport Holdings Pty Ltd (ASX: SYD) FY20 result and capital raising

Sydney Airport is looking to raise $2 billion in a capital raising. Existing shareholders will be able to buy one new Sydney Airport security for every 5.15 securities at a price of $4.56 per new share. The new shares are being offered at a 13.2% discount to the theoretical ex-entitlement price of $5.26.

The money will be used to pay down the ASX 200 share’s debt, strengthen the balance sheet, maintain its investment grade credit rating and increase the liquidity available. Sydney Airport will have a lot of liquidity after the raising. But the company is reducing its capital expenditure plans. 

Sydney Airport reported a loss after income tax of $53.6 million. Net operating receipts dropped 79% to $90.4 million and earnings before interest, tax, depreciation and amortisation (EBITDA) was down 35.4% to $300.4 million.

Total passengers in the first quarter of 2020 was down 18% to 9 million. Total passengers in the second quarter was down 96.6% to 0.4 million.

Sydney Airport CEO Geoff Culbert said: “Sydney Airport is taking further decisive action to strengthen its balance sheet and to help ensure it remains well capitalised to meet the challenges presented by an uncertain COVID-19 operating environment, and to ensure it is positioned for growth in the future.”

More reading

• The latest ASX stocks leading brokers are urging you to buy today
• Why the Coles share price just hit a new record high
• Here’s why the OZ Minerals share price rocketed 24% in July
• These record breaking ASX stocks just got downgraded by top brokers
• Has the ASX 200 finally taken off?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re considering a few changes to your portfolio in the near future, then you might want to take a look at the shares listed below.

I believe these five ASX shares would be great options for investors right now:

a2 Milk Company Ltd (ASX: A2M)

The first quality ASX share to consider buying is this fresh milk and infant nutrition company. It has really caught the eye over the last few years thanks to its rapid earnings growth. Pleasingly, I‘m confident this strong form can continue for some time to come thanks to the increasing demand for its infant formula products in the massive China market.

Altium Limited (ASX: ALU)

Altium is an electronic design software provider that I would buy. I think it could be a great long term option due to the Internet of Things and artificial intelligence booms which are driving strong demand for its Altium Designer software. It also has other businesses, such as Octopart, that have a lot of potential. I expect them to support its overall growth in the 2020s.

CSL Limited (ASX: CSL)

I think this biotherapeutics company is a standout buy. Thanks to its world class CSL Behring and Seqirus businesses, I continue to believe CSL can be a market beater for some time to come. Especially considering the increasing demand for immunoglobulins, its growing plasma collection network, and its lucrative product development pipeline.

Nanosonics Ltd (ASX: NAN)

This infection control specialist could be a quality long term option for investors. It is the company behind the industry-leading trophon EPR disinfection system for ultrasound probes. I expect this product and the upcoming launch of several new products to underpin solid earnings growth over the next decade.

Pushpay Holdings Group Ltd (ASX: PPH)

A final option to consider is Pushpay. It is a donor management platform provider for the faith sector that has been growing at a rapid rate thanks to its leadership position in a niche but lucrative market. Management has set itself a target to win a 50% share of the medium to large church market in the future. This represents a US$1 billion revenue opportunity and is many times greater than FY 2020’s revenue of US$127.5 million.

More reading

• 3 quality ASX shares to buy in August
• ASX 200 up 1%: Challenger disappoints, Sydney Airport to raise $2bn, a2 Milk names new CEO
• Has the CSL share price lost its ASX 200 market darling status?
• 3 tips for beginners investing in ASX shares
• If you invested $10,000 in Afterpay shares last year, you’d have this much today…

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., Nanosonics Limited, and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Nanosonics Limited and PUSHPAY FPO NZX. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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